Taxes in Maryland: State Tax Guide 2026
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Taxes in Maryland: State Tax Guide 2026
Tax information is for educational purposes only and does not constitute tax advice. Consult a licensed tax professional for your specific situation.
Maryland is one of the few states where residents pay both a state income tax and a mandatory local (county) income tax, pushing the combined top rate above 8% in some jurisdictions. The state also levies an estate tax with a lower threshold than the federal exemption. On the plus side, Maryland does not tax Social Security benefits, offers a generous pension exclusion for retirees, and has property taxes near the national average.
Maryland Income Tax Rates (2026)
Maryland uses a progressive income tax with eight brackets. Rates for single filers:
| Tax Rate | Taxable Income Range |
|---|---|
| 2.00% | $0 – ~$1,000 |
| 3.00% | ~$1,001 – ~$2,000 |
| 4.00% | ~$2,001 – ~$3,000 |
| 4.75% | ~$3,001 – ~$100,000 |
| 5.00% | ~$100,001 – ~$125,000 |
| 5.25% | ~$125,001 – ~$150,000 |
| 5.50% | ~$150,001 – ~$250,000 |
| 5.75% | Over ~$250,000 |
Married filing jointly brackets are higher, with the top rate of 5.75% applying above ~$300,000.
County income tax (required): Every Maryland county and Baltimore City levies a local income tax ranging from 2.25% (Worcester County) to 3.20% (Howard, Montgomery, Prince George’s, and several other counties). This is applied as a percentage of Maryland taxable income, not as a separate tax system.
Combined top rate: A high earner in Montgomery County pays 5.75% state + 3.20% local = 8.95% combined.
Sales Tax
| Component | Rate |
|---|---|
| State rate | 6.00% |
| Local add-on | None |
| Combined rate statewide | 6.00% |
Maryland does not permit local sales tax add-ons. The 6.00% rate is uniform statewide.
Exempt from sales tax: Most groceries, prescription and nonprescription medications, and medical devices. Alcoholic beverages are subject to a 9.00% sales tax rate.
Property Tax
| Metric | Amount |
|---|---|
| Average effective rate | ~1.01% |
| National average | 0.99% |
Property taxes vary by county. Baltimore City has one of the highest rates in the state at approximately ~$2.25 per $100 of assessed value, while Howard County is approximately ~$1.01. Maryland reassesses property every three years, phasing in increases over three annual installments.
Homestead tax credit: Limits the amount of property tax increase due to reassessment to 10% per year (less in some counties — Montgomery County caps it at 0%). This protects long-term homeowners from sudden tax jumps.
Homeowners’ tax credit: Income-based credit for homeowners whose property taxes exceed a percentage of gross income. Available to households of any age.
Other Taxes
- Estate tax: Maryland imposes an estate tax on estates above ~$5,000,000, with rates up to 16%. Maryland is one of only two states (along with New Jersey historically) that imposes both an estate tax and an inheritance tax.
- Inheritance tax: 10% on inheritances to non-lineal heirs (siblings, nieces/nephews, friends, etc.). Direct descendants, spouses, parents, grandparents, and charities are exempt.
- Capital gains: Taxed as ordinary income at state + local rates (up to ~8.95%).
- Fuel tax: ~$0.47 per gallon (increased under the Transportation Infrastructure Investment Act).
- Cigarette tax: ~$3.75 per pack.
- Digital advertising tax: Maryland was the first state to impose a tax on digital advertising revenue, though the tax has faced legal challenges. Rates range from 2.50% to 10% based on global annual gross revenue.
Tax Breaks and Credits
- No tax on Social Security: Maryland does not tax Social Security benefits.
- Pension exclusion: Residents aged 65+ or totally disabled can exclude up to ~$36,200 of pension income, including from 401(k) and IRA distributions, if their federal AGI is under ~$100,000 (single) or ~$150,000 (joint).
- Maryland EITC: ~45% of the federal EITC for filers with qualifying children (one of the most generous state EITCs). ~100% of the federal EITC for childless filers.
- Child tax credit: Maryland offers a state child tax credit for families with dependents under 6 and income under ~$15,000.
- Student loan debt relief credit: Up to ~$5,000 for qualifying Maryland residents with student loan debt (competitive application process).
- 529 plan deduction: Up to ~$2,500 per beneficiary per year.
Key Takeaways
- Maryland’s combined state and local income tax can reach ~8.95%, putting it among the highest effective rates in the region
- The mandatory county income tax (2.25%–3.20%) is unusual and significantly increases the total burden
- Maryland is one of the few states with both an estate tax and an inheritance tax
- Retirees benefit from no Social Security tax and a generous ~$36,200 pension exclusion
- Property taxes are near the national average, with strong homestead and income-based credit protections
Next Steps
- Compare Maryland to other states at State Income Tax Comparison: All 50 States Ranked
- Understand your federal obligation with the Federal Income Tax Guide 2026
- Make sure you claim everything you can — Tax Deductions You’re Probably Missing
- Ready to file? See How to File Your Taxes Step by Step
Tax information is for educational purposes only. Consult a licensed tax professional.